Savers Vaults went live with the latest THORNode update. What exactly are Savers Vaults? What will they bring to the THORChain users? How do they work, and how are they implemented in THORWallet? Keep on reading to find out all about them!
The Savers Vaults are the latest innovation of the THORChain protocol and represent the pinnacle of crypto technology. They offer a single-sided real yield on your native assets such as BTC, ETH, or AVAX in a decentralised way.
Before, users who wanted to earn a yield on THORChain (or any other DEX) had to supply both their chosen asset, e.g. BTC, and RUNE in a 50:50 ratio. This introduces the risk of Impermanent Loss, which you can now avoid by using Savers Vault instead. It is as simple as depositing BTC and earning BTC.
How does it all work?
For example, a user enters the Savers Vault with 1 BTC (native).
- The native BTC is swapped for an equivalent amount of native RUNE
- Native RUNE is used right away to mint equivalent amount of Synth BTC
- The Synth BTC is locked in the Savers Vault and earn yield.
Once the user decides to leave the pool, the process is as follows:
- Synth BTC is removed from the Savers Vault
- Synth BTC is redeemed for native RUNE
- Native RUNE is swapped fro native BTC and returned to the user
The user earns roughly 50% of what the dual-sided liquidity providing earns. For instance, if the normal LP APR equals 20%, the saver would be earning approximately 10%. In the graphic above, you can see the whole process, including the slippage fees and arbitraging.
Of course, there is no free lunch, and Savers Vaults have its risks. While there are no CeFi risks, there are protocol/DeFi risks such as bugs, exploits, governance, etc. Besides these, there are also risks specific to the mechanics of Savers Vaults. One of the core developers of THORChain, Chad Barraford, goes into great detail about those here:
Savers Vaults in THORWallet DEX
As always, the new functionality is seamlessly integrated into our Apps (iOS & Android) and WebApp. It will be called Savers Vault, and you will be able to find it under the new EARN tab on the mobile app and the menu of the WebApp. All you have to do is select the asset you want to deposit into the Savers Vault and hit continue. As a next step we will develop an analytics dashboard for the Savers Vaults.
This new feature makes yield generating through Liquidity Pools simpler than ever before as there is no impermanent loss and opens the possibility to earn yield for BTC and other maximalists on their assets without exposing themselves to another one. We are incredibly excited about this new, industry-first feature, and we cannot wait to have it online for our users!
Your THORWallet DEX team